Student entrepreneurs seek to aid Zambians with microloans

A new student organization on campus plans to help people in Zambia start their own business using microfinancing, or small-scale lending, by raising $5,000 by the end of next semester.

The organization, TCU Opportunity, is associated with Opportunity International, a nonprofit organization dedicated to helping poor entrepreneurs start or expand a business.

Josh Dennis, a founder of the organization and a junior entrepreneurial management and finance and real estate major, said he has done much research on microfinancing and became interested in starting a student organization.

“It can be as small as a $50 loan to buy fertilizer to put under a banana tree to increase the number of bananas, which they can sell to their village,” said Dennis, who is also the founder of, an online textbook service he started this fall that will donate 5 percent of its profits to the cause.

Bangladeshi economist Muhammad Yunus received the Nobel Peace Prize in 2006 for pioneering the use of microcredit, which is the extension of small loans to low-income clients too poor to qualify for traditional bank loans.

The club is raising money to lend to trust groups of 25 or more people in Zambia, a country in southern Africa. Members of the trust groups keep one another accountable for the loans to make sure the money is paid back, Dennis said. If someone cannot pay the money back when the loan payment is due, they come together and help the individual who is short, he said.

Sam Hamann, a senior economics major, said the club wanted to control its vision from the start.

“Initially we wanted to start small and start focused because it’s such a big idea that it would be easy to get lost in it,” Hamann said.

Dennis said the way the trust group spends the money is entirely up to them.

Garry Bruton, academic director of the Neeley Entrepreneurship Program who has done research involving microfinancing, said one of the issues involved with microfinance is whether those who receive loans make fundamental changes in their lives.

The hope is that this doesn’t just become a line of credit, Bruton said. Some of the better lenders educate those who borrow money from them, he said. Education might include money management or an explanation of a checking account, Bruton said.

“You want long-term changes, not just short-term changes, unless you’re just in it for the profit,” Bruton said. “If you’re just in it for the profit it doesn’t really matter, it’s just a return.”

Bruton said annual interest rates as high as 50 percent to 75 percent are not uncommon among some lenders.

“There are a lot of banks, for profit banks, that are now into microlending,” Bruton said. “I think sometimes people associate microlending with basically nonprofits, that’s clearly not the case and even some nonprofits make exorbitant returns.”

Dennis said the interest is used to cover the cost of providing the service.

Nat Hass, regional director of Opportunity International, said the interest rate charged changes from country to country, but the organization tries to apply the lowest interest rate possible.

Hass said about 80 percent of loans are given to women because they are usually starting family businesses. He said there is an average repayment rate of 98 percent, and microfinancing is a workable solution to global poverty.

“It’s not a handout,” Hass said. “It’s a hand up.”

Hass said he and others travel to educate those who take out loans on managing finances and basic business skills. Trust groups are also educated about business and lifestyle issues during weekly meetings, he said.

Dennis said TCU Opportunity will raise money by conducting different events, such as charity dinners, where a speaker will lecture on microlending.

Hass said he is working directly with TCU Opportunity by providing handouts, speakers and support.

Money will be directly transferred to Opportunity International and redistributed to those in need, Dennis said. Dennis said that if the group raises enough money, he would like to send club members to Zambia to help provide the less fortunate with as much entrepreneurial training as they can.

“If you went to meet a new client, she would probably have great difficulty looking you in the eye,” Hass said. “If you expanded your hand in greeting she would have a very tough time responding. If you went back in a year when she was maybe on her second loan and expand your hand she will look you eye to eye because you have given her hope.”

Hamann said he was interested in using microfinance to help people help themselves.

“When the loans are paid back, it allows more loans to be given, so it’s not just a single donation, it’s a donation that continues,” Hamann said.

Like Hamann, Dennis said the Bible is a big influence to why he started the club.

“Around here we are so blessed, and forget that there are people out there living on $2 a day,” he said.

Dennis said TCU Opportunity is business-oriented, but anyone can join who wants to help.

Opportunity International

80 percent – Loans given to women

98 percent – Average repayment rate

$5,000 – Campus fundraising goal